The Pantry, Inc.
by Michael VodickaOctober 01, 2010 | Comments : 0 Recommended this article: (0)
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The Pantry, Inc. owns and operates a chain of more than 1,650 convenience stores and 230 quick service restaurants in the southeastern United States. The company was founded in 1967 and has a market cap of $538 million.
Shares of PTRY took a big jump on August 3 after the company reported excellent Q3 results that handily beat estimates.
Revenue for the period was up 16.5% from last year to $1.9 billion. Earnings also came in strong at 94 cents, 38% ahead of the Zacks Consensus Estimate.
The company's gains were led by its merchandise segment, where sales were 8.8% from last year and 7.7% on a same-store basis. The Pantry's fuel segment was a bit of a drag, where gasoline expenses were up $200 million from last year to $1.35 billion, helped partially by above average margin.
Effective Expense Management
The pantry also relied on managing its expenses to drive profits, where total operating and SG&A expenses were up only 3% on the nice 16.5% sales increase.
Estimates were on the upswing into the good quarter, but have jumped even higher since, with the current year up 27 cents to $1.41. The next-year estimate has added 18 cents, climbing to $1.73, a bullish 23% growth projection.
But in spite of the recent gains, the valuation picture is still in check, with share trading with a forward P/E of 17X compared to the industry average of 16X.
PTRY began moving higher into the Q3 earnings release but jumped higher after the actual results came in better than expected to hit a new 52-week high at $24.43. The MACD below the chart is bullish too, with the short-term average recently turning ahead of the long-term average. Look for support from the trend line and previous breakout area at $21 on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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